Investors Split on Whether Market Will Go Higher This Year

Story Highlights

49% of investors expect market to be higher at end of 2019

28% predict stock prices will be same as today, 23% say they will be lower

Six in 10 investors concerned market is peaking

WASHINGTON, D.C. -- Half of U.S. investors, 49%, were bullish on the stock market in the second quarter, saying they expected average stock prices to be higher by the end of 2019. At the same time, 23% were distinctly bearish, expecting prices to be lower at year's end while another 28% predicted they will be the same.

Investors' Prediction for Stock Market in 2019

Still thinking about the stock market, by the end of this year do you expect average stock prices to be a lot higher, a little higher, the same, a little lower or a lot lower than they are now?

Total higher

The same

Total lower

Net bullish

%

%

%

pct. pts

U.S. investors

49

28

23

26

Retirement status

Retired

49

33

18

31

Not retired

50

26

25

25

Gender

Male

57

20

23

35

Female

41

36

23

18

Age

18 to 49

46

27

26

20

50 to 64

57

23

20

37

65 and older

45

35

20

25

Amount invested

$100,000+

54

26

20

34

Less than $100,000

46

28

26

20

Party ID

Republican

78

18

4

74

Independent

47

26

27

20

Democrat

29

37

33

-4

Net bullish= % total higher minus % total lower

Wells Fargo/Gallup, May 6-12, 2019

Most subgroups of investors are moderately more positive than negative about the direction of the market. One exception is partisan groups, as Republicans overwhelmingly expect stock prices to increase (78%) while Democrats are slightly more likely to predict a decline than an increase (33% vs. 29%).

Other slight differences in investors' outlook for the market in 2019 are likely related to these party differences. In particular, men, investors with more than $100,000 invested and retirees -- all of whom tilt more Republican than their counterparts -- are more likely than women, lower asset investors and non-retirees to expect the market to increase.

These findings are based on the Wells Fargo/Gallup Investor and Retirement Optimism Index second quarter survey, conducted by web May 6-12 using the Gallup Panel. Investors for this survey are defined as adults with $10,000 or more invested in stocks, bonds or mutual funds, either within or outside a retirement savings account.

Four in 10 Investors Experiencing Wealth Effect

At the time of the poll, the stock market was doing well, with the Dow Jones Industrial Average holding steady at just under 26,000 throughout the seven-day field period. Survey respondents were asked to say how the market's current performance was making them feel on four different dimensions.

Sixty-one percent of investors said the market's performance made them concerned the market was peaking and poised to drop. At the same time, 53% said it made them feel more confident about their own retirement savings.

While not majorities, large segments of investors also said the market's performance was making them feel more comfortable about spending money (44%) and about their ability to make major purchases in the next year (40%). This so-called wealth effect may be reflected in the government's latest report on consumer spending, showing increases in purchases on motor vehicles, restaurants and hotel accommodations. Despite this, the increase in overall spending reported by the Commerce Department was fairly muted.

Stock Market Impact on Investors' Financial Confidence

Please say whether the stock market's performance right now is or is not making you feel each of the following ways.

Concerned market is peaking

More confident in retirement savings

More comfortable spending money

More confident making major purchases

%

%

%

%

U.S. investors

61

53

44

40

Retirement status

Retired

54

62

58

55

Not retired

64

50

38

33

Gender

Male

57

60

51

46

Female

65

46

37

33

Age

18 to 49

66

45

33

27

50 to 64

55

58

51

47

65 and older

60

61

55

51

Amount invested

$100,000+

63

57

46

40

Less than $100,000

60

49

37

36

Party ID

Republican

28

87

79

73

Independent

66

43

37

31

Democrat

82

38

23

22

Wells Fargo/Gallup, May 6-12, 2019

There are a few notable distinctions in these findings among subgroups of investors:

Non-retired investors are only slightly more likely than retired investors to say the market is peaking; however, they are much less likely to say the market's performance enhances their confidence in spending money or making major purchases.

Women are less likely than men to say the market makes them more comfortable about spending money or making major purchases.

Investors under age 50 are less likely than those 50 to 64 and 65+ to say the market makes them feel more confident in their retirement savings or about spending.

There is no difference by investment class in the perception the market is peaking, but lower asset investors are slightly less likely to say the market makes them feel more confident about their retirement savings or about spending money today.

Market-driven emotions are highly related to partisanship with most Republicans rejecting the idea that the market is peaking and feeling more confident about their savings and spending. Most Democrats predict the market is peaking and few say the market performance makes them feel confident about their finances.

Bottom Line

With the stock market back near record-high levels after a down year in 2018, investors are showing signs of concern. Half believe the market will continue to deliver gains in the second half of 2019, but the other half predicts the market will flat-line or retreat, neither of which is good for portfolios.

Still, green stock tickers make the slight majority of investors, particularly retirees, feel more confident about their retirement security. Such confidence can have dividends for the economy if healthy portfolios cause investors to boost their spending -- a phenomenon known as the wealth effect. About four in 10 investors, fueled mostly by Republicans, report feeling this way. One reason this isn't reflected in stronger overall consumer spending could be that Republicans' exuberance about the stock market is offset by Democrats' heavy skepticism.

The results of this Wells Fargo/Gallup Investor and Retirement Optimism Index survey are based on a Gallup Panel web study completed by 1,240 U.S. investors, aged 18 and older, from May 6-12, 2019.

The Gallup Panel is a probability-based longitudinal panel of U.S. adults. Gallup recruits panelists using random-digit-dial phone interviews that cover landline and cellphones, as well as using address-based sampling methods. The Gallup Panel is not an opt-in panel.

The sample for this study was weighted to be demographically representative of the U.S. adult population, using the most recent Current Population Survey figures. For results based on this sample, one can say that the maximum margin of sampling error is ±5 percentage points at the 95 percent confidence level. Margins of error are higher for subsamples. In addition to sampling error, question wording and practical difficulties in conducting surveys can introduce error and bias into the findings of public opinion polls.